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Author: markr33 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35357  
Subject: Re: I'm laughing, sort of Date: 11/15/2007 11:31 AM
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<<Why do you think that future house purchasers should subsidize previous house purchasers that purchased more than they can really afford?>>

I don't think this. I think the CEO of Countrywide who made hundreds of billions from predatory lending should be the one to pay.


That's what I meant here - http://boards.fool.com/Message.asp?mid=26098873

Countrywide should be held responsible, at least in part, for the bad loans they made. In some ways, it could be considered fraud, loaning money at teaser rates to someone that you know cannot afford that loan at the real rates as defined by the APR of the loan, and then, with that knowledge, selling those loans packaged as AAA, AA, or A-rated packages. Frankly, Countrywide perhaps should be the "big one" that is permitted to fail.

There are ways of working these things out that are good economics and fair.

I haven't seen any good and fair suggestions. Do you have any links to such proposals?

I don't want a bailout of someone who was house flipping

How exactly do you determine if it was house flipping or not? What if it was the first house being flipped?

and I don't think someone who got a low teaser rate should be let off the hook.

They were already let off the hook with all those previous years of below market rate interest rates. Not to mention that most of them have been living "rent free" for a few months.

But a lot of the people who are in foreclosure, disproportionately minorities, were subjected to predatory lending. And those responsible for making these loans, or those who bought them up with the idea of making big money on high rates, are the ones who should lose out. I've seen some good proposals about avoiding foreclosure by providing affordable loans with the homeowner sacrificing a substantial proportion of future equity in the home.

This is a very good idea and one that I could support. But I still don't understand how keeping someone in a home they cannot really afford is helping them or anyone. Those homes have all sorts of other higher expenses associated with them when compared to a more modestly priced home.

Nobody wins with massive foreclosures. But I want to see the predatory lenders and the big banks and the hedge funds, not communities or those predated upon pay the price.

In some ways, the big banks and big mortgage originators have already paid a price - the value of their businesses have greatly declined, and many of the smaller ones have gone completely out of business. But the big ones should not be let off the hook and the current owners should have to forfeit much of their ownership if any bailout begins.

The communities are paying, and will continue to pay, the price anyway since they have a bunch of people living there that cannot truly afford to live there and aren't maintaining their properties properly, and haven't, and won't, pay the homeowners association dues (thus causing everyone else to pay more since the expenses remain the same).

Actually, so far, the only folks not to pay a price yet are the home"owners" themselves. Not only did they put little or nothing down on their home, and pay a below market rate for all these years, but they've lived "rent free" for 6, 7, or more months! Oh, and Angelo Mozillo also hasn't paid a price yet, but he will eventually.
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